Nigeria's oil industry suffering setbacks

July 22, 2013

Oil is one of one of the most lucrative and important exports for the economy of Nigeria. As such, anything that jeopardizes the crude oil trade can be immensely detrimental to the country's general financial well-being. Recent data from OPEC pointed out that between May and June 2013, Nigerian oil production dropped by 3.5 percent, to reach a total of 1.8 million barrels per day. This is being attributed in part to piracy taking place on the oil fields, according to UPI, and the nation is looking to mitigate these losses by establishing a certification process. This may be the subject of conversations between those in the Nigerian oil business and their foreign colleagues, using international calling cards.

The news source reported that the process being considered would be similar to regulations used to ascertain the legitimacy of the diamond trade and prevent blood diamonds - those sold by extremists to finance paramilitary operations - from entering the market. Representatives at a joint European Union and Africa-Caribbean-Pacific summit discussed implementation of the system at a meeting in Abuja, Nigeria on July 22.

Much of this theft takes place in Nigeria's southern ports, where oil pirates steal about 4,000 barrels worth of crude each day.

According to Bloomberg, the decline in oil production is also cited as a motivating factor behind the plans of FBN Capital Ltd., Nigeria's central bank, to lower the targeted trading range of the nation's currency, the naira. FBN Capital analyst Gregory Kronsten told the source that the resulting lower prices for oil "[make] it more difficult for the central bank to hold the line on the naira exchange rate."

As of morning trading on July 22, the naira stood at 161.18 per United States dollar - an increase under 0.1 percent. Overall, the currency has experienced a 3 percent drop so far this year.